ACA Exemption - Affordability

The Tax Prep Dispatch, You Can't Afford to Overlook Affordability, by Brad Martin is a great article to remind you of the details of the affordability exemption to the Individual Shared Responsibility Payment. 

Ladder Up has a Health Insurance Affordability Exemption Worksheet that can be used along with Colorado Tax Aide's ACA Affordability Calculator for more complex situations. You can watch the tutorial video to learn how to use the calculator. 

ACA Exemption - Short Coverage Gaps

ACA Exemption - Short Coverage Gaps

Overview: A coverage exemption (code “B”) can be claimed for the taxpayer or another member of the tax household for each month of a gap in coverage of less than 3 consecutive months.

Marketplace to Medicaid Backlog - Hardship Exemption Available

A case study from Get Covered Illinois describes that if someone’s health insurance application was delayed due to a backlog of files, they’re eligible for a hardship exemption from the shared responsibility payment.

ACA Affordability Exemption Use Cases

If the taxpayer or someone from their tax family didn't have insurance for the entire year, the tax preparer needs to determine if they can claim some sort of exemption from the health insurance mandate. To begin, determine if the uninsured person is eligible for other exemptions. (One requirement of the affordability exemption is that the person is not eligible for other exemptions.) Review the use cases below for examples of determining what type of affordability exemption each uninsured person in the household might be eligible for: household income, employer-sponsored insurance, or marketplace insurance. 

Each case makes use of the ACA Exemptions Related to Income Tool which has been designed to help tax preparers with different income calculations that are necessary to determine eligibility for ACA exemptions related to income, especially the affordability exemption.

Single taxpayer with household income below the filing threshold

Single taxpayer with $20,000 household income and offer of employer-based coverage

Single taxpayer with $30,000 household income and no offer of employer-based coverage

Single taxpayer with $35,000 household income and no offer of employer-based coverage

One spouse with employee-only offer of insurance, one spouse with no insurance, and child with insurance through CHIP